The Internet has enabled computer users all over the world to interact and communicate electronically. One particularly popular mode for communication is through Web pages, which collectively form the World Wide Web. Web pages are useful for displaying text and graphics, and even animation, video data and audio data. Unsurprisingly, Web pages have also become popular for electronic commerce (e-commerce), as they enable vendors to display various types of goods to users, and to effectively advertise these goods. A large number of Web sites are currently devoted to e-commerce, and users can purchase a wide range of goods, from books to electronic equipment and even perishable goods, such as groceries.
Part of the attraction to producing a Web site for e-commerce is that international sales of products are possible. Computer users can view and purchase products without being in the physical “brick and mortar” store of the vendor, and even without being in the same geographical area. However, although the Internet and the World Wide Web have easily crossed international boundaries for communication, e-commerce is still hampered by the requirement for payment in the currency of a particular country. Typically, a vendor must be paid in the currency of the vendor's own country, which may be different from that of the buyer.
The problem has been at least partially solved through credit cards which can be used for purchases internationally. Such credit cards enable a buyer to purchase goods through e-commerce from a vendor in a different country. However, although credit card companies handle currency transactions from the currency of the buyer to the currency of the vendor, thereby enabling multiple currency e-commerce transactions to occur, the final cost may vary widely. For example, credit card companies may use a conversion rate which is less favorable to the user, than if the user had performed the currency transaction through a bank or other financial institution. In other cases, e-commerce Web sites which attempt to provide information concerning the final cost of their goods in a variety of currencies may find that changes in the currency market have caused their prices to be inaccurate, thereby exposing the vendors to currency risks, regardless of the actions of the credit card companies.
In addition, vendors who wish to support transactions in multiple currencies, regardless of the risk, must also handle complex accounting issues in these multiple currencies.
A more useful solution to this problem would enable the buyer to purchase goods with currency which is local to the buyer, at a price which is known to the buyer in advance, through e-commerce Web sites on an international basis. This solution would enable the buyer to examine goods from the Web site of choice, and then to view information concerning the final cost of these goods in the buyer's own currency, regardless of the currency of vendor. In addition, such a solution would enable the vendor to handle transactions with only a single currency, thereby minimizing risk and simplifying accounting issues, while still enabling the buyers to use the currency of choice for purchases. Unfortunately, such a solution is not currently available.
In a B2B (business to business) scenario, a different set of problems may arise with regard to currency transactions. In one scenario, the buyer may negotiate to purchase goods from the seller through the Internet, such as through a Web site, or through other means. The buyer guarantees payment to the seller for the goods via a payment mechanism. There are several payment mechanisms available to guarantee large amount transfers between business trading partners, including Letter of Credit, Swift, ACH and others. On-line hedging mechanisms, which would support these types of transactions at the point of “sale”, or business transaction, would also be useful, but unfortunately are not available.
Therefore, there is an unmet need for, and it would be highly useful to have, a system and a method for multiple currency transactions for e-commerce, whether from a business to a consumer or between businesses, in which the final price of the product is given to the buyer in the local currency of the buyer before a purchase is made, and such that a final price is also guaranteed to the seller in the local currency of the seller, through hedging of the currency transaction on behalf of the seller, preferably with associated risk management on behalf of the central managing entity.